Financial organizations will be allowed to interstate information exchange

On the 20th of June the State Duma has passed the bill, approved by the Government of the FR, in its second and third reading, which grants to Russian financial organizations the right to transfer the information on American taxpayers, as well as obliges foreign financial organizations to transfer the information on Russian citizens to Federal Tax Service of the RF.

New rules are focused on the creation of legal conditions for information exchange between Russian and foreign financial organizations and tax authorities.

In some extent such normative acts are of revolutionary nature, because the necessity of disclosure of financial information about residents abroad is long overdue. So that, since the 1st of July the American Law «Foreign Account Tax Comliance Act» (FATCA) comes into effect. It demands from foreign banks to provide information on accounts of American clients to the Internal Revenue Service of the USA. From those banks, which are not ready to comply with the demand, the bank counterparties in the USA will be obliged to withhold taxes at the rate of 30% for a number of payments, including the income from investments.

At the same time our law-maker has included some sufficient clauses:

financial organizations are granted with the right to transfer the information on foreign taxpayers to foreign fiscal bodies

only by gaining approval from the client;

force of the bill in case of its passage won’t be extend to citizens of the RF and legal entities, established under the Russian law,

which have more than 90% of shares of the authorized capital directly or indirectly controlled by the RF or citizens of the RF;

Rosfinmonitoring (the Federal Financial Monitoring Service) has the right to forbid the transfer of requested information

to a foreign tax authority.

In total, it can be observed the liberalization of legal relations in the sphere of interstate exchange of fiscal information, what, finally, will increase the transparency of transactions with foreign counterparties.